Summary of Comments Received on the Notice of Intent to Regulate Greenhouse Gas Emissions by Large Final Emitters

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The Notice of Intent to Regulate Large Final Emitters was published in the Canada Gazette, Part I on July 16, 2005. It outlines how the federal government plans to implement its climate change policy with respect to greenhouse gas emission reductions by Large Final Emitters (LFEs).

The working assumption is that the proposed regulation would be developed under Parts 5 and 11 of the Canadian Environmental Protection Act, 1999 (CEPA 1999). The Minister of the Environment would be the responsible Minister, and the proposed regulations would be administered by Environment Canada.

The publication of the Notice of Intent was followed by a 60-day comment period. A total of 37 submissions were received. Responses came from various industry organizations, companies, provincial governments, environmental organizations, traders and interested members of the public. The following is a summary of the comments received.

Comments included:

Overall, there was strong support from environmental organizations for the government's proposal to regulate greenhouse gases using CEPA 1999. Comments received from industrial sectors reflected mixed opinions regarding regulatory development under CEPA 1999. The majority of industry respondents had strong concerns regarding the designation of carbon dioxide as a toxic substance.

Comments included:

Overall, industry was supportive of a harmonized approach to regulation, highlighting the importance of cooperation between federal, provincial, and territorial governments. Industry respondents also supported the development of a single national emissions reporting system. Environmental organizations expressed a desire for federal authorities to retain final decision-making authority in implementing the Large Final Emitters system.

Comments included:

Overall, industry responses reflected a generally positive attitude toward emissions intensity targets. Certain sectors pointed out the potential challenges in setting and meeting proposed emissions intensity targets. Environmental organizations were opposed to the use of intensity, rather than absolute, emissions targets.

Comments included:

Overall, there was strong support expressed by industry for facility-specific emissions intensity targets. Certain sectors raised sector-specific concerns that are being dealt with through the development of the sector-specific regulations. Environmental organizations expressed the belief that the exclusion of fixed process emissions from the emissions intensity targets for LFEs is unadvisable.

Comments included:

Overall, respondents expressed qualified support for the BATEA concept. Environmental organizations encouraged the federal government to interpret BATEA stringently.
Responses from industry expressed divergent opinions on whether BATEA targets should be applied on a sector or facility basis. Some companies and sector organizations raised sector-specific issues that are being dealt with through the development of sector-specific regulations.

Comments included:

Overall, industry respondents expressed general support for the eligibility of clean energy, demand-side management, and non-LFE co-generation. A number of respondents, however, expressed concern about the difficulties involved in accounting for co-generation emissions. Environmental organizations are concerned that double-counting of credits under the Offset System and Partnership Fund will take place.

Comments included:

Overall, industry respondents were supportive of the establishment of minimum emissions thresholds of annual greenhouse gas emissions that a company must exceed in order for the proposed LFE regulation to be applicable. Opinions were divided, however, on how the threshold should be implemented. Environmental organizations want the government to ensure that the exemption of smaller emitters does not significantly reduce the overall amount of industrial emissions.

Comments included:

Overall, responses indicated that industry would like the transaction costs of a domestic emissions trading system to be minimized. Traders are concerned about the size of the domestic emission trading system and the impact of the $15 dollar price assurance on market liquidity. Some environmental organizations expressed a preference for a cap-and-trade system over a "baseline-and-credit" emissions trading model.

Comments included:

Overall, industry was supportive of including contributions for technology investment as a compliance option. Questions were raised regarding the specifics of how the contributions to the Greenhouse Gas Technology Investment Fund and other eligible technology investment funds will be implemented. Environmental organizations raised concern that technology investment for compliance purposes allows Large Final Emitters to "buy" their way out of compliance rather than reduce their greenhouse gas emissions intensity.

Comments included:

Strong support was expressed by the majority of respondents for a simple and practical mechanism to implement the $15/tonne price assurance. Some suggestions were made on how this could be achieved. Traders raised concerns about the impact of the price assurance on the liquidity of the carbon market domestically, and how it will affect compatibility with international carbon markets. According to environmental organizations, the $15/tonne price assurance is too low, and costs in excess of $15 will be borne by taxpayers to subsidize LFE compliance.

Comments included:

Overall, industry representatives and the provinces expressed support for flexibility in the true-up process. Traders would like to see harmonized timelines between Canadian and international carbon markets.

Comments included:

Overall, industry expressed support for the operator at the end of the year to be responsible for the compliance liability, although there were some divergent opinions. Environmental organizations did not comment.

Comments included:

Overall, industry respondents believe that the $200/tonne penalty could have severe economic consequences for certain sectors. Environmental groups, on the other hand, feel that the penalty is too low and ford not reflect the environmental and social impacts of non-compliance. Traders want to ensure that LFE reductions targets that are not met will be carried over into the next compliance period.

Comments included:

Overall, strong support was expressed for a harmonized, one-window reporting system. Environmental organizations requested that all data reported be made available for public access.


If you have any questions or comments regarding the Large Final Emitters System, you can direct your message to:

Greenhouse Gas Reductions Directorate
Environment Canada
155 Queen Street, 2nd floor
Ottawa, Ontario
K1A 0E3

Tel: 613-943-1704
Fax: 613-995-3663
E-mail: lfe-gef@ec.gc.ca

For general information on climate change, please visit the Climate Change web site of Canada or call 1 800 O Canada (8000-622-6232).

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